* Goldman advising buyer, Stanchart advising seller-sources
* Star Newspaper says deal between $3.3-$3.7 bln
* Saudi Arabia's Acwa Power had shown interest
(Recasts with new sourcing; adds Goldman role)
By Anuradha Raghu and Saeed Azhar
KUALA LUMPUR/SINGAPORE, March 5 Malaysian
tycoon Ananda Krishnan is nearing a deal to sell his $3 billion
worth of power assets to a government company as he seeks to
shed risky businesses, sources with knowledge of the deal said
The sources did not confirm the sale price, but Malaysia's
Star Newspaper reported that the sale to 1Malaysia Development
Berhad (1MDB) was indicated at a price range of 9.92 billion
ringgit ($3.30 billion) and 11.16 billion ringgit ($3.71
Goldman Sachs is advising 1MDB, said two sources, who
declined to be named because the deal is not public. A
spokeswoman for Goldman Sachs in Hong Kong declined to comment.
Standard Chartered is advising the seller.
The deal would come as a surprise to potential buyers of the
power assets in the Middle East. Saudi Arabian water and power
project developer Acwa Power had recently said it was "very
keen" to buy the power assets being sold by the Malaysian
tycoon. Others had also expressed interest.
"This is an extraordinary price to pay given the location of
the assets and the short-term PPAs (power purchase agreements)
for many of the assets," said a second source.
Ananda's Tanjong Energy Group owns and operates eight power
plants and has investments in five in Bangladesh, Egypt,
Malaysia, Pakistan, Sri Lanka and the United Arab Emirates, with
a total net generating capacity of 3,951 MW.
The sale had attracted 12 local and international bidders,
including the country's No.2 lender CIMB and the
Employees Provident Fund.
Another source with knowledge of the auction process said
Tanjong Energy Group, through which Ananda holds his power
sector assets, had set a high asking price for the assets as it
had paid a steep price for them.
"The requested valuation of the assets made it very
difficult for a strategic investor to compete. I believe a
government-owned entity with a lower cost of equity is a natural
buyer," the source, who declined to be named because of the
sensitivity of the matter, said.
Analysts said the Malaysian government's move to purchase
power assets might be the start of an overhauling of the
country's whole power generation industry in the long run.
"It actually comes as a surprise that Ananda Krishnan would
want to dispose of his power assets and exit the power business,
but it could be because the Power Purchase Agreements (PPAs) are
coming to an end," said an analyst in Malaysia, who declined to
be named because of the sensitivity of issue.
The Energy Commission has confirmed that a new power
generation tender exercise will replace the current power
purchase agreements (PPAs) that expire in 2016-2017.
Currently state-run utility Tenaga Nasional Bhd,
which posted a third consecutive quarterly loss in January, is
the offtaker of the electricity generated by Tanjong's plants in
Under PPAs, which are long-term deals that underpin foreign
power investment in southeast Asian countries, generators are
able to pass on fuel costs to end users and hence enjoy
BIGGEST REGIONAL POWER DEAL
1MDB focuses on investments in the energy, real estate,
tourism and agribusiness sectors. In energy, it targets
strategic high-value projects in both conventional and renewable
energy, according to its web site (www.1mdb.com.my/).
1MDB officials were not available to comment on the report.
The sale by Malaysia's second-richest man would be the
country's biggest power asset deal and the largest in Southeast
Asia. Ananda also plans to sell satellite operator MEASAT Global
Bhd, Singapore's Straits Times newspaper reported last week.
Ananda, reckoned by Forbes to have assets of $9.5 billion,
was taking advantage of the higher risk appetite in the market
to hive off riskier assets from his empire that runs from
telecoms to pay-TV, analysts have said.
The largest regional deal in the sector was struck in 2008
when Temasek Holdings [TEM.UL} sold its Singapore generation
firm PowerSeraya to Malaysia's YTL Power for $3.03
($1 = 3.0045 Malaysian ringgit)
(Additional reporting by Dinesh Nair in Dubai and Charlie Zhu
in Hong Kong; Editing by Stuart Grudgings and Muralikumar